BAE Systems, Britain's leading arms contractor, is considering a $10bn (£6bn) bid for L3, the New York-based defence electronics company, in a move to shore up its position in America's lucrative military market, senior industry sources said yesterday.

The British group is expected to use the proceeds from the sale of its 20% stake in Airbus, the European plane-maker - likely to be between £3bn and £4bn - to help it fund the purchase and expand its presence in the growing internal security business.

L3, founded by Frank Lanza in 1997 with the aid of bankers Lehman Brothers and Lockheed Martin, the world's biggest defence contractor, has grown hugely through acquisitions and made 25% of its $9.5bn sales last year from national security equipment.

This month, the company won the contract to provide explosives detection equipment at Heathrow's new fifth terminal and said it would boost sales this year to $12bn after the acquisition of rival Titan. Neither company would comment on the proposed deal but it is known the two held merger discussions in 2002 prior to talks between BAE and Boeing on a tie-up. Negotiations with L3 were aborted on the grounds of price but have been revived.

Senior industry sources said talks between BAE and EADS, the Franco-German-Spanish aerospace and defence group that owns 80% of Airbus, were "live" and a deal could come very soon. This month, Hans Peter Ring, EADS finance director, put a "very conservative" valuation on BAE's stake in Airbus of €3.5bn but sources said it was likely to fetch £4bn. EADS could offer its own shares or a mix of paper and cash but BAE would swiftly sell the stock, financial experts said.

Mike Turner, BAE's chief executive, has repeatedly made plain his group's desire to expand in the US where its sales have quadrupled in the last five years to $80bn, notably with last year's £2.2bn purchase of tank-maker United Defense. The group makes 40% of its sales in America. One industry executive said the Pentagon, which favours home-grown companies under congressional pressure, would not allow BAE - or any other overseas group - to acquire or merge with the country's prime contractors such as Lockheed, Boeing or Northrop Grumman - or even missile-maker Raytheon.

A BAE insider, confirming the intent to sell the Airbus stake, said the aim was to invest the proceeds in the US but added: "The problem is that there is not a lot available to buy."

L3, which initially floated in May 1998, is valued at about $10bn and saw operating earnings jump a third last year to $997m. It has $4.6bn of debt and gearing of 50% but expects annual sales this year to top $12bn and its profit margin to dip slightly to 10.2%.

Mr Lanza, who is expected to step down soon, has already held extensive talks with BAE during his company's failed bid to acquire the UK group's stake in German marine electronics company Atlas Elektronik, which eventually went to ThyssenKrupp and EADS. Some observers believe a BAE approach could provoke a bidding war.

Arms companies are increasingly investing in internal security. EADS recently set up a new division, and GE, America's biggest industrial group, today will unveil a "checkpoint of the future" in Paris to make air travel safer and passenger movements faster.

GE, a competitor of L3, makes $2bn sales from security out of a total $200bn, but plans to increase these exponentially, executives said. The pilot checkpoint project, to be trialled at Heathrow and another European airport, can detect weapons, including explosives, in luggage and on individuals.